TUI, the owner of the Thomson and First Choice holiday brands, is cutting its holiday capacity despite reporting an increase in turnover and earnings for the second quarter of the year.
The group has reported a 20% year-on-year increase in turnover to £4.9bn (€6.2bn) compared to £4.1bn (€5.2bn) in the same period last year, while operating earnings rose to £172m (€216m) compared to £27.8m (€35m) last year. It says it saw a strong performance across its both tourism and containing shipping businesses.
Its tourism business, which includes TUI Travel, TUI Hotels and Resorts and a cruise business, has reported an increase in turnover from £2.9bn (€3.7bn) last year to £3.7bn (€4.7bn), an increase of 32% compared with the first half of the 2007. Meanwhile, its operating earnings are up 91% to £68m (€86m).
But TUI is planning to reduce holiday supply in the UK by 21% over the winter, with summer holidays cut by 15%. TUI chief executive Peter Long says the move is driven by the current gloomy economic climate.
The company says that the merger of TUI and First Choice has delivered “the expected synergies and that it continues to expect growth in specialist holidays, activity and online destination services. It also expects growth in its hotels division drive by increased demand for long-haul holidays.